Capital Market And Accounting Information

2155 Words Apr 3rd, 2015 9 Pages
Capital Market and Accounting Information

Submitted to: Mr. Syed Abdulla Al Mamun, Ph.D. Assistant Professor North South University

Introduction
Today we take the capital market very much for granted. The creation of an economy in which the limited liability companies could easily be formed and their shares sold and transferred between investors dates from the industrial revolution of Great Britain. The concept of shares being transferable was a brilliant idea. It enables investors to invest in a business for just as long as they wish. When they wish to end their interest, they are able to sell their shares without harming the company whatsoever. An open and free market allows them to sell shares easily. From the company’s point of view, it has a long term capital in the form of shares for as long as it wishes. Also, it is an easy mechanism through which the company can raise new capital.
The relationship between published financial or accounting information and capital market is a complex one. The capital market is affected by analyst’s forecasts and expectations putting pressure on companies to adjust their reported earning numbers. Share prices are affected by the way corporate profits and balance sheet data…
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